The private markets investment division of Schroders has been handed its first Australian private debt mandate from an unnamed "large" industry superannuation fund, with the sizable mandate set to cover corporate, real estate and infrastructure debt.
Speaking on the occasion of Schroders’ historic move, Nicole Kidd, head of private debt, said the Australian private debt market although still nascent, is emerging as a strong and attractive region for private debt investors.
“We are seeing a great opportunity emerge in Australia in bringing together investors looking for attractive returns with borrowers looking for flexible capital,” Ms Kidd said.
Private debt, as an asset class, has garnered the attention of investors particularly for enabling access to diversified returns in a period of prolonged low interest rates and stock market volatility.
As such, it has become a sought-after asset class for institutional portfolios.
According to the chief executive officer of Schroders Australia, Sam Hallinan, superannuation funds also stand to benefit.
“Superannuation funds are becoming increasingly complex, dealing with more challenging paradigms, such as Your Future, Your Super (YFYS), and the ability to leverage relationships with key managers is becoming ever more important to them,” Mr Hallinan said.
“Investors are wanting to invest in assets that are non-correlated to equities, for instance, and that offer good diversification. Private debt portfolios for institutions can also be customised to ensure best fit with overall asset allocation strategy,” he continued.
As of 31 December, Schroders Capital had $103 billion of assets under management (AUM) in private assets including $7.7 billion in infrastructure, $38.4 billion in real estate, and $25.4 billion in private debt and securitised credit.
For its new mandate, Schroders is targeting a return of 4.5 per cent return over its benchmark, the Bloomberg AUSBOND Bank Bill index.
Last month, Schroders announced the launch of the Schroder Global Active Allocation Fund alongside a foundation investment mandate from yet another unnamed large government super fund.
Schroders said that the composite benchmark was an equally weighted blend of MSCI All Country World, Ex-Australia, Equities Index and the Bloomberg Barclays Global Aggregate Bond Index, to match the risk profile of the YFYS benchmark.
“In response to a large government super fund’s need for a strategy that managed directly to the YFYS alternative asset benchmark, we created a multi-asset fund that aims to outperform within a tracking error limit,” Mr Hallinan said at the time.
“We bring our considerable experience to bear in partnering with the fund on this investment opportunity.”
The Schroder Global Active Allocation Fund will be run by lead fund manager Angus Sippe with the firm’s Australian multi-asset team.
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
